No GST on unredeemed Vouchers: Clarifies CBIC

CBIC Clarification: Circular Number 243/37/2024-GST dated 31-Dec-2024

Sometimes, vouchers remain unused/unredeemed at the end of their expiry period. In such cases, the businesses generally make book adjustments and account for the said amount on account of unredeemed vouchers in their statement of income. The value of such unredeemed vouchers accounted for in the statement of income is called breakage.

In the case of breakage, there is no redemption of vouchers, and there is no supply of underlying goods and/or services. Therefore, there is no supply of goods and/or services on account of such unredeemed vouchers (breakage). Also, “consideration” under GST is defined under section 2 (31) of the CGST Act, in relation to the supply of goods or services or both. As there is no underlying supply of goods and/or services in the case of non-redemption of vouchers by the customer, the amount retained for unredeemed vouchers by the voucher issuer cannot be construed as consideration for any supply.

Accordingly, such an amount attributable to unredeemed vouchers (breakage) would not be taxable as per the provisions of section 9(1) of the CGST Act.

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